TASR, Teraz.sk, 01.09.2014

Squire Patton Boggs to Represent Slovakia in Arbitration with EuroGas

Bratislava, September 1 (TASR) - The state of Slovakia will be represented by American law firm Squire Patton Boggs in its arbitration dispute with EuroGas and Belmont Resources concerning a compensation claim of $3.2 billion (€2.3 billion) for what the petitioners assert was a marred investment in talc quarrying in Gemerska Poloma (Kosice r egion), TASR learnt on Monday. This information was released in the Public Procurements Bulletin. The commission, worth €3.12 million for a period of 48 months, concerns mainly the drawing up of analyses and strategies and the provision of consultancy services and legal representation at the International Centre for Settlement of Investment Disputes (ICSID). The Finance Ministry's decision to find a legal representative via a public tender has been praised by Attorney at law Jana Martinkova from Advocatus Martinkova. The mi nistry in the past selected legal representatives without a tender, pointing to alleged shortages of time that couldn't have been expected. "I don't believe that the aforementioned exemption from the rule could apply to the EuroGas dispute, as the intention to engage in arbitration has been known for several years," said lawyer Martinkova. The selection of the legal representative by the state was criticised by the other side in the dispute, however. EuroGas managing board chairman Wolfgang Rauball told TASR that a conflict of interests is involved. "A former employee of law firm Derains & Gharavi, which represents me, has gone over to Squire Patton Boggs. He was part of the team that worked on the arbitration case with Slovakia," said Rauball. According to Martinkova, this might not be a conflict of interests if the former employee of EuroGas's current legal representative didn't come into contact with information that might give an advantage to the opposing side. "If this lawyer has such information, it's a conflict of interests, however. It may be possible that the law firm will exclude him from the case formally, but for the state it would be better in legal terms to change the legal representative; otherwise this could represent a weak point for the state in the dispute," said jurist Martinkova. Meanwhile, the names of the arbitrators for both sides have already been announced - professor Brigitte Stern for Slovakia and professor Emmanuel Gaillard for EuroGas. Gaillard is known for his success in the Yukos arbitration case. An arbitration court in The Ha gue in July decided that Russia must pay a record $50 billion to Yukos. "The president of the tribunal should be elected by September 30," Rauball told TASR last month. The tribunal president should be a representative of a third party. If the two sides don't find agreement on the president, he or she will be nominated by the ICSID. It isn't possible to appeal against an ICSID verdict at any court in the world. According to Plus 7 Dni weekly magazine, EuroGas claims that it lost its licence for a talc quarry due to corruption involving then economy minister Pavol Rusko. It asserts that it has evidence to support this. The company has also lodged a complaint with the ICSID and the European Commission concerning a police operation on July 2 during which 16,000 pages of documents and computers with infor mation concerning EuroGas's subsidiary Rozmin were seized. EuroGas believes that the operation was related to the arbitration dispute. Police Corps spokesman Michal Slivka confirmed that a National Criminal Agency (NAKA) operation did take place and that it was ordered by a judge of the Specialised Criminal Court in Banska Bystrica in order to collect evidence concerning suspicions of serious fraud. The Slovak Supreme Court has ruled twice in the past that it was illegal to take away EuroGas's licence. EuroGas began indicating its plans to take legal action against Slovakia in 2010. At first, it demanded compensation of €500 million in 2011. One year later a company called EuroGas Inc., registered in the USA, also began claiming compensation. EuroGas asserted that its rights relating to a trade agreement between the erstwhile Czechoslovakia and the USA from 1991 had been violated. The Slovak Finance Ministry last year denied that any such agreement had been broken. The talc deposit in Gemerska Poloma was discovered accidentally d uring a search for tin in 1985. The talc from the deposit has high levels of purity, and experts view it as one of the most important in the world. The largest producer of talc worldwide is China, but significant deposits are also located in the USA, Brazil and India, while Finland is a significant producer in Europe. In view of the wide-ranging options for the industrial use of talc, mainly in the pharmaceutical, chemicals, cosmetics and paper industries, market demand for this raw material is rising steadily.